New analysis has revealed that last year the world’s wealthiest sovereign pension, the Government Pension Fund Global (GPFP), dropped its investment in more than 50 coal companies.
Targeted by divestment campaigners, the fund worth £604 billion invests in over 7,000 companies and has long been tied to the fossil fuel industry – founded on the nation’s oil and gas reserves.
Last year, however, GPFG sold off its holdings in 53 coal companies, dumping 16 US coal companies including Peabody Energy and the mountain-top-removal companies Arch Coal and Alpha Natural Resources, as well as 13 Indian companies, including Coal India.
The GPFG revealed in February that it had dumped 32 coal companies due to concerns that environmental action would cut their value, but did not name those companies.
In its latest annual report, the Norges Bank, manager of Norway’s Government Pension Fund, also urged the companies it invests in to implement business strategies in accordance with climate change targets.
Arild Skedsmo, conservation director for WWF-Norway, reacted with positive comments to the Norges Bank report:
This is a strong signal of a changing world, facing up to the reality of acting on climate change. This means coal, oil and gas companies in which it invests are being asked to consider just how robust their business model is in a world managing to tackle the worst impacts of climate change. So far, most oil companies have dismissed this as unrealistic and placed their bet against global action on climate change.
However, analysis of official data by Norway’s largest environmental NGO, Future In Our Hands, released on March 13 shows the fund still holds financial stakes in 90 of the top 100 oil and gas companies, as ranked by the amount of carbon in their reserves.
And in fact the fund has increased its ownership of 59 of these 90 companies by £20 billion in total.
GFPF divested from only three Chinese coal companies and even increased investment in the Chinese coal industry by £60m.
This comes as the writing is increasing on the wall for coal across the globe, including in China where in 2014 coal consumption fell for the first time this century.
The total value of the GFPF’s coal holdings fell by only 5% to £6.5 billion in 2014, despite its moves to divest.
Arild Hermstad from the Future in Our Hands told the Guardian:
Our pensions are increasingly being invested in oil and gas and this is a trend Norwegian politicians have a responsibility to stop. The way the GPFG is behaving contradicts all established research on climate change.
There’s also a financial risk related to these investments, when we know that Europe, the US and China are heavily investing in renewable technology. We expect renewable companies to gain better operating conditions in the time to come, and it’s a pity that the fund isn’t picking up on this trend.
Norway’s largest private pension fund KLP divested from coal in 2014. Truls Gulowsen of Greenpeace Norway said:
It is shameful that Norway’s private pension funds are far more willing to take action on the coal issue than the GPFG. Investing oil proceeds into the coal industry is the worst possible use of our nation’s money.
WWF Norway is calling on the Norwegian government to mandate the fund to invest 5% in renewable energy, as well as fully from coal mining and coal based energy production.
The global divestment campaign will sustain the pressure on GFPF and other governmental and private financial bodies in order to achieve further significant successes.
Many senior figures and institutions in the financial world, including the World Bank, Bank of England, HSBC, Goldman Sachs and Standard and Poor’s, have warned that the vast majority of known fossil fuel reserves needs to stay in the ground in order to avoid a global temperature rise of 2C, as several analyses have shown.
According to a new study at University College London, 80% of coal, 49% of gas and 33% of oil reserves cannot be burned in order to meet the 2C target.
Researchers and financial institution alike have warned that fossil fuel investment is both a huge risk to the environment as well as to investors’ capital.
The value in fossil fuels might collapse as nations make arrangements to tackle climate change, leaving vast swathes of known fossil fuel reserves unburnable.
This could result in a major economic crisis, as pointed out by researchers such as Lord Nicholas Stern, professor at the London School of Economics.
The Go Fossil Free divestment campaign recently received significant support from the UN framework convention on climate change (UNFCCC). The organisation in charge of global climate negotiations said it was lending their “moral authority” to divestment campaigns.
“We support divestment as it sends a signal to companies, especially coal companies, that the age of ‘burn what you like, when you like’ cannot continue,” said Nick Nuttall, the official spokesman for the UN framework convention on climate change (UNFCCC).